WEST virginia
legislature
2017 regular session
By
[
to the Committee on
A BILL to amend the Code
of West Virginia, 1931, as amended by adding thereto a new article, designated
§29-25A-1, §29-25A-2, §29-25A-3, §29-25A-4, §29-25A-5, §29-25A-6, §29-25A-7,
§29-25A-8 and §29-25A-9, all relating to legalizing interactive gaming;
providing legislative findings; establishing licensing requirements; limiting
licensing to existing gaming facilities; providing that the Lottery Commission
regulate interactive gaming; providing operations controls; providing
prohibitions and criminal penalties; assessing gaming and licensing fees;
incorporating rules and statutes applicable to interactive gaming; and
providing a tax and administration of the tax for operation of an interactive
gaming license.
Be it enacted by the
Legislature of West Virginia:
That the Code of West
Virginia, 1931, as amended, be amended by adding thereto a new article,
designated §29-25A-1, §29-25A-2, §29-25A-3, §29-25A-4, §29-25A-5, §29-25A-6,
§29-25A-7, §29-25A-8 and §29-25A-9, all to read as follows:
Article 25A. Authorized interactive gaming.
§29-25A-1. Legislative findings.
(1) The Legislature finds and declares that
interactive gaming permitted by this article constitutes the operation of
lotteries within the purview of section thirty-six, article VI of the
Constitution of West Virginia;
(2) That legalization of video lottery and table games
in West
Virginia has delivered substantial benefits to the state,
including the creation of thousands of
significant contributions to racing and agricultural
industries;
(3) Developments in technology and recent legal decisions have created an opportunity to
legalize interactive poker as a means to further enhance and
complement the benefits delivered by casino gaming and
licensed facilities to or for the benefit of the communities
in which they operate;
(4)
Interactive gaming operates by having players establish and draw funds from an
individual account to place a wager in authorized games
through the Internet and similar communications media. The
state currently authorizes gaming in the form of video lottery
and table games. These gaming operations
provide licensed entities the appropriate level of experience
to introduce a platform for interactive gaming that protects
the player and the integrity of the lottery games;
(5) It is a
vital public interest that licensed entities retain responsibility for the
interactive gaming software and hardware which shall remain
under their ultimate operational and supervisory control of
the state. To ensure
that actual control and supervision remains with the licensed
entity, the licensed entity's publicly accessible Internet
website or similar public portal shall be marketed and made
available to the public under the licensed entity's own name
and brands and not the brands of third parties;
(6) Any
interactive gaming enforcement and regulatory structure shall begin from the premise
that participation in a lawful and licensed gaming industry is
a privilege, not a right and that regulatory oversight is
intended to safeguard the integrity of the games and
participants and to ensure accountability;
(7) The
state has entrusted the control and
regulation of gaming to the Lottery Commission. It
is therefore appropriate to delegate the responsibility for the
implementation and regulation of interactive gaming to the
commission; and
(8)
Authorized interactive gaming, once fully developed, will allow persons in this state to
participate in interactive games, not only with other persons
in this state, but with persons in other cooperating jurisdictions in the United States where interactive gaming has been
authorized.
The
following words and phrases when used in this chapter have the meanings given to them in this
section unless the context clearly indicates otherwise:
(a)
"Authorized game" means any interactive racetrack, video lottery or
interactive table game approved by
the commission pursuant to this chapter.
(b)
"Authorized participant" means a person placing a wager who is either physically present in this state
or located in a jurisdiction with which the state has
negotiated an interactive gaming agreement. The intermediate
routing of electronic data in connection with interactive
games may not determine the location or locations in which a
wager is initiated, received or otherwise made.
(c) “Commission” means
the West Virginia Lottery Commission established pursuant to article twenty-two
of this chapter.
(d)
"Interactive game" means any game offered through the use of communications technology that allows a
person, utilizing money, checks, electronic checks, electronic
transfers of money, credit cards, debit cards or any other
instrumentality, to transmit to electronic information to
assist in the placing of a wager and corresponding information
related to the display of the game, game outcomes or other
similar information. The term does not include the conduct of
gaming that occurs entirely among participants located within
the licensed facility of the licensee or its affiliate, to the
extent that any such gaming may be authorized by the
commission, or nongambling games that do not otherwise require
a license under the laws of this state. For purposes of this
definition, "communications technology" means any
method used and the components employed by an establishment to
facilitate the transmission of information, including, but not
limited to, transmission and reception by systems based on
wire, cable, radio, microwave, light, optics or computer data
networks, including, but not limited to, the Internet and
intranets.
(e)
"Interactive gaming agreement" means a negotiated agreement between the state and one or more of the
states or territories of the United States in which
interactive gaming is legally authorized that permits persons
located in such other jurisdictions to place wagers on
interactive games with licensees in this state or to permit
persons located in this state to place wagers on interactive
games with licensees in such other jurisdictions, or both.
Agreements may contain other provisions the commission considers
appropriate, except that only authorized games may be
permitted to be offered to persons located in this state
pursuant to an agreement.
(f)
"Interactive gaming license" means a license issued by the commission pursuant to this chapter which
authorizes the holder to offer authorized games for play by,
and to accept bets and wagers associated with authorized games
from, authorized participants.
(g)
"Interactive gaming platform" means the combination of hardware and software designed and used to
manage, conduct or record interactive games or the wagers
associated with those games and which has been approved by the
commission for purposes of the conduct of authorized games.
(h)
"Interactive gaming skin" means the portal to an interactive gaming platform or Internet website
through which an authorized game is made available to
customers in this state.
(i)
"Internet" means a computer network of interoperable packet-switched
data networks.
(j)
"Key interactive gaming employee" means an individual employed by a licensee, significant vendor or
applicant, or by a holding or intermediary company of a
licensee, significant vendor or applicant, who is involved in
the operation of, or of the wagers associated with, interactive
gaming and who is empowered to make discretionary decisions
that regulate interactive gaming operations.
(l)
"Poker" means any of several card games traditionally known as poker, in which players compete against
each other and not against the person operating the game,
including a game using an electronic device that simulates a
deck of cards. The term includes cash games and tournaments.
Licensees may assess a rake or any other type of fee
associated with the game, contest or tournament but may not
wager with or against any player.
(m)
"Significant vendor" means a person who offers or proposes to offer any of the following services with
respect to interactive gaming:
(1)
Management, administration or control of wagers or of the interactive games themselves;
(2) Development, maintenance, provision or
operation of an
interactive gaming platform or any discrete component thereof;
(3) Sale, licensing or other receipt of
compensation for selling
or licensing a database or customer list of individuals
residing in the United States selected, in whole or in part,
because they placed wagers or participated in gambling games
with or through an Internet website or operator or any
derivative of such a database or customer list;
(4) Provision of any product, service or asset to
a licensee or
significant vendor in return for a percentage of interactive
gaming revenue, not including fees to financial institutions
and payment providers for facilitating a deposit or withdrawal
by an authorized participant; or
(5) Provision of any trademark, trade name,
service mark or
similar intellectual property under which a licensee or significant
vendor identifies to customers the authorized games, the
website or equivalent hosting the authorized games, any
interactive gaming skin or the interactive gaming platform,
but excluding intellectual property of a person providing
only art or graphics.
The term
does not include any key interactive gaming employee of a licensee or significant vendor. A
significant vendor must be licensed by the commission to
provide these services.
(a) The commission shall propose rules for legislative
approval in accordance with
article three, chapter twenty-nine-a of this code, for the
operation and conduct of interactive gaming pursuant to this article: Provided, That the rules promulgated by
the commission that are necessary to begin the lottery games are exempt from
the provisions of chapter twenty-nine-a of this code in order that the selected
games may commence as soon as possible.
(b) The
commission shall authorize licensees and significant vendors to conduct interactive gaming
at gaming facilities as established pursuant to article twenty-five of this
chapter. The commission shall also develop
standards for evaluating and approving interactive gaming
platforms for use with interactive gaming. The commission may determine the categories of employees who satisfy the definition of "key interactive employee" and may exclude from the scope of this
definition any particular licensee, significant vendor, applicant or employee or category of employee it considers appropriate.
(c) The
commission may negotiate
and enter into interactive gaming agreements on behalf of the
state consistent with this article.
(d) To the
extent practicable,
the commission shall negotiate interactive gaming agreements
with other states, territories or possessions of the United
States in which interactive gaming has been authorized to allow
players in this state to participate in authorized games with
players in such other jurisdictions.
§29-25A-4. Prohibition on unauthorized Internet gaming;
criminal penalties.
(a) It is unlawful for any person to willfully and knowingly operate, carry on, offer or
expose for play or to knowingly or willfully provide services for any interactive game or to accept any bet or wager associated with any interactive game from any person physically located in this state at the time of the play that is not within
the scope of a valid and current license issued by the commission
pursuant to this chapter or by another state, territory or
possession of the United States with which the state has an
interactive gaming agreement that permits that activity. It is unlawful for any person to willfully and knowingly
provide services with respect to any interactive game, bet or
wager:
(1)
For a first violation of subsection (a), a person is guilty of a misdemeanor and, upon
conviction thereof, shall be fined not less than $75,000 nor
more than $150,000 or confined in jail not more than one
year, or both fined and confined;
(2) For a
second or subsequent violation of subsection (a), a person is guilty of a felony and,
upon conviction thereof, shall be fined not less than
$150,000 nor more than $300,000 or imprisoned in a state
correctional facility not less than one nor more than three years, or both fined
and imprisoned.
(b) An unlicensed person offering interactive games to persons in this
state is liable for all taxes required by this chapter in the
same manner and amounts as if that person were a licensee.
Timely payment of the taxes does not constitute a defense to
any prosecution or other proceeding in connection with
unauthorized interactive gaming, except for a prosecution or
proceeding alleging failure to make such payment.
Ninety days
from the effective date of this section, the commission shall permit filing of applications for licenses pursuant to this article by entities
currently licensed by article twenty-five of this chapter.
Current
gaming facilities, whose licenses to offer video lottery
games and table games are in good standing, are suitable to
be issued an interactive gaming license by the commission. An applicant that was not
licensed as an authorized gaming facility pursuant to article twenty-five of
this chapter or did not hold a valid racing license granted by the Racing
Commission prior to January 1, 1994, pursuant to the provisions of article
twenty-three, chapter nineteen of this code is not eligible for a license. Within sixty days of entry
of the commission's order granting a license, the successful
applicant shall pay a licensing fee of $50,000.
Each
interactive gaming license applicant shall submit to the commission and department, in such
manner as the commission requires, a description of its
administrative and accounting procedures in detail, including
its written system of internal control. In addition to other
such standards that the commission may choose to require. The commission shall require licensees to implement appropriate safeguards:
(1) To
ensure, to a reasonable degree of certainty, that authorized participants are not less
than twenty-one years of age;
(2) To ensure,
to a reasonable degree of certainty, that authorized participants are physically
located within this state or such other jurisdiction that is
permissible under this chapter;
(3) To
protect, to a reasonable degree of certainty, the privacy and online security of
authorized participants;
(4) To
ensure, to a reasonable degree of certainty, that the interactive games are fair and
honest and that appropriate measures are in place to deter,
detect and, to the extent reasonably possible, to prevent cheating,
including collusion and use of cheating devices, including the use of software programs, sometimes referred to as "bots," that make bets or wagers according to algorithms;
(5) To
minimize compulsive gambling and to provide notice to authorized participants of
resources to help problem gamblers; and
(6) To
ensure authorized participants' funds are held in accounts segregated from the funds of
licensees and otherwise are protected from corporate
insolvency, financial risk or criminal or civil actions
against the licensee.
§29-25A-8. Taxes on gaming activities.
(a) The tax rate which shall be assessed and collected by the commission with respect to any wagers placed by residents of this state with an interactive gaming operator outside of this state, but authorized pursuant to an interactive gaming agreement, are governed by the agreement but may not exceed fourteen percent of
gross interactive gaming revenue derived from residents of
this state.
(b)
Each licensee shall report to the department
and pay from its daily gross interactive gaming revenue, on a
form and in a manner prescribed by the department, a tax of fourteen
percent of its daily gross interactive gaming revenue, which
shall be payable to the department on a weekly basis and shall
be based upon gross interactive gaming revenue for the previous
week.
§29-25A-9.
Applicable gaming facility laws and rules apply.
If federal
law authorizes
interactive gaming which establishes a tax based on gross
interactive gaming revenue, deposits or the substantial equivalent
of or intended substitute for either of them, of which a
portion is allocated to the states, that tax shall supersede,
in its entirety, the tax imposed by this section. All moneys collected pursuant to this article
shall be deposited in the account created in created section twenty-two,
article twenty-five of this chapter: Provided, That moneys collected from an
authorized gaming facility shall be deposited in the account created in section
twenty-two, article twenty-five of this chapter. The commission shall establish by rule and
maintain minimum internal control standards that incorporate any applicable
rules and statutes regulating gaming facilities necessary to effectuate the
provisions of this article.
NOTE: The purpose of this bill is
to authorize Internet gaming managed and licensed through existing authorized
gaming facilities in West Virginia.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.